The new Government of Argentina announced this Tuesday that the official exchange rate will go from 400 pesos per US dollar to 800 pesos per dollar, one of the measures of the “urgency” package to stabilize the economy. This is a 50% weakening of the official exchange rate. Likewise, the Executive of Javier Milei will reduce state subsidies for energy and transportation, as announced this Tuesday by Luis Caputo, Argentine Minister of Economy, in a message recorded and broadcast on a delayed basis.

It has also confirmed the reduction in the size of the Government, in a package of measures that they hope will be like economic “shock” therapy aimed at solving its worst crisis in decades. Caputo, in a package of measures highly anticipated after the far-right and libertarian Milei took office this Sunday, has assured that it is a “plan that will probably be painful in the short term, but that it was necessary to reduce the fiscal deficit and reduce inflation.

“The goal is simply to avoid a catastrophe and get the economy back on track,” Caputo said. The country’s foreign exchange and grain markets had been closed on Tuesday as traders awaited the new government’s economic plan. The banks had already anticipated a strong devaluation.

On the other hand, the minister explained that energy and transport subsidies will be reduced because “today, The State artificially maintains very low prices in energy rates and transportation through subsidies.” Caputo has stated that “politics has always” done this “because in this way it deceives people, making them believe that it puts money in their pockets.”

“But these subsidies are not free but are paid with inflation“said the new minister of the Government of Javier Milei. The package focuses on a strong reduction in State spending with a view to achieving fiscal balance and cutting monetary issuance in the bud, causing high inflation in Argentina, according to the diagnosis of the new Government.